Coca Cola Company: China
With the onset of globalization companies are enrolling their operations, establishing fully operational plants in foreign territories. Few countries remain isolated in terms of investments from foreign multinational. A good example of a multinational company is the Coca Cola Company. Coca Cola Company is an American Multinational company which is a global leader in the beverage industry. It has made its presences in all of the world’s continents and in over two hundred of the world’s country. In the companies oversees ventures, the Coca cola china forms one of the company’s massive investments.
The aim of companies setting out operations in foreign territories may be to seek new markets, to diversify, to seek new raw materials, to find new technology, to get production efficiency and reduce costs (Nadeem et al, 2002). Coca Cola Company was attracted by the potentially lucrative market opportunity presented by the then China’s human population which ran into hundreds of millions. Since 1928, when Coca Cola Company was introduced in China it has undertaken massive development in the country. Currently the company has over 40 bottling company in the republic of China and in 2004 the company boasted of producing over 1 billion bottles of Coca Cola products for the Chinese market alone. The Coca Cola business in China has been mainly driven by innovation as Coca Cola has over 500 brands. Each of these brands is tailored to suits different segments of the market.
For a company to achieve success in overseas territory it has to act local and conform to the standards of the locals (Nadeem et al, 2002). The biggest and first step towards a multinational company acting local is understands the local culture of the people of that country. Every nation has its own unique culture which they would love to see them respected and appreciated by others. These cultures define organizational operations, conduct, behaviors and offers. The success of any organization in foreign territories will depend on its ability to adjust and adapt to the local culture. A company must adopt management styles as well as manufacturing and tailor them to the existing culture. Ensuring that communication conform to the cultural values of the people is also of essence for a company to achieve success in foreign territory. When the Coca Cola Company was being introduced in China the products brands had to be translated into Chinese characters in order to make them blend in with the Chinese culture. Research was conducted to find the right character that will suitably have the same syllables as the Coca Cola brand. Many characters were dropped because of their meaning. After a lot of searching the company came up with the characters K’o K’ou Ko Le. This can be translated to mean “permit mouth to be able to rejoice”. The culture of the country of operation also determines the pricing by an organization (Meng and Juan, 2009). Culture has got huge impact on the perception of price and value of a commodity, another reason for companies to put the local culture into consideration when setting up foreign operations.
A company must also give the local people a sense of ownership and belonging towards a company and its products. Coca Cola Company contributes significantly to the local economy by providing employment and promoting trade. Coca Cola’s 40 plus bottling companies in China and thousands distribution firms of the company’s product provide employment and business opportunity to many of Chinese people. A part from creating economic opportunities, the company has also committed itself to various social responsibilities in the country. Over the years, the company has funded projects for improvement of education for underprivileged children throughout the country. Coca Cola Company has also developed initiatives for promoting environmental sustainability in China. In 2007, the company in partnership with WWF launched a project to conserve Yangtze River which serves over 400 million people with water. Despite all these, the Chinese people still view the Coca Cola Company as foreign. Recent attempt by the company to acquire a local beverage manufacturing company was halted due to opposition by the Chinese government. They had the view that allowing the acquisition to take place will amount to foreign domination in the country beverage industry.
An organization should be able to adhere to the operating laws of the country of operation and maintain ethical standards. Adherences to rules and ethical standard concerning recruiting the labor force, treating your labor force, relationship with consumers, suppliers and other stakeholders must be adhered to. This rules and standard may be unique and different from the company’s country of origin. Nevertheless, they must be upheld and not undermined. The Coca Cola Company has always been rated highly in terms of its ethical standards in its foreign operations.
In conclusion companies setting up operations abroad must adhere to the specific needs of the country of operation. The operation of Coca Cola in the US and Coca Cola company in china is very different. The difference is clearly brought out in terms of the difference in market, labor force, trade rules and regulations and culture. The Chinese market is very different from the American market and therefore, Coca Cola China has had to come up with local solutions that will suit the needs of the local markets.
Coca Cola Company (2010), Coca Cola Continues Strong Investment in China, retrieved on December 13, 2010, from http://www.thecoca-colacompany.com/presscenter/nr_20101029_china_investment.html
Meng and Juan (2009), Understanding cultural influence on price perception: Empirical insights from an SEM application, retrieved on December 13, 2010, from http://gradworks.umi.com/33/47/3347792.html
Nadeem et al (2002), Think Globally Manage Culturally, International Journal of Commerce and Management, Vol. 12, Iss 3/ 4 pg 32, retrieved on December 13, 2010, from http://faculty.cbpp.uaa.alaska.edu/afef/ba447-think_globally_manage_culturally.htm